Vacic v DC Strategy Pty Ltd
[2018] FCCA 3151
•7 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| VACIC v DC STRATEGY PTY LTD | [2018] FCCA 3151 |
| Catchwords: INDUSTRIAL LAW – PRACTICE AND PROCEDURE – Whether without prejudice letter is admissible under exceptions in s.131 of the Evidence Act 1995 (Cth) – whether letter affected the Applicant’s workplace rights within the meaning of s.340 of the Fair Work Act 2009 (Cth) – whether without prejudice letter constitutes a threat of adverse action affecting Applicant’s rights – letter did not constitute a threat, and was not capable of being a threat, of adverse action. |
| Legislation: Fair Work Act 2009 (Cth), ss.340, 341, 342 Evidence Act 1995 (Cth), s.131 |
| Cases cited: FairWork Ombudsman v Australian Workers’ Union [2017] FCA 528 Glass v Demarco [1999] FCA 482 Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 1352; 84 NSWLR 547 |
| Applicant: | DEJAN VACIC |
| Respondent: | DC STRATEGY PTY LTD |
| File Number: | MLG 2777 of 2017 |
| Judgment of: | Judge Baird |
| Hearing date: | 27 February 2018 |
| Date of Last Submission: | 27 February 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 7 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Kenneally |
| Solicitors for the Applicant: | Mr S Platel, McDonald Murholme |
| Counsel for the Respondent: | Mr Follett |
| Solicitors for the Respondent: | Mr M Robinson, FCB Workplace Law |
ORDERS (Made 27 February 2018)
Clauses 56(xx) and (xxi) of the Applicant’s Statement of Claim (Claim) be struck out.
The particulars to clause 52 of the Claim be struck out.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2777 of 2017
| DEJAN VACIC |
Applicant
And
| DC STRATEGY PTY LTD |
Respondent
REASONS FOR JUDGMENT
Overview
On 27 February 2018 I heard argument as to whether “clauses” [52] and [56] (xx) and (xxi) of the Points / Statement of Claim should be struck out. The Applicant asserted that the claims made by certain of the particulars to [52] and by subparagraphs (xx) and (xxi) of [56] were founded on a without prejudice letter dated 5 October 2017 from the Respondent employer to the Applicant employee (5 October Letter) communicated by email that day, and that the letter was admissible.
The substantive proceeding is docketed to Judge Riethmuller, and in the ordinary course will proceed to hearing before him. Through their counsel both parties accepted that the strike out application and the question of the admissibility of the 5 October Letter could be determined as a separate question by me, and assured me that my hearing and determination of these issues would obviate the need to deal with them at final hearing, and the possibility that, depending upon the ruling, the trial judge, Judge Riethmuller, would be placed in a position where he could not continue to hear the matter. Counsel assured me that the matter should be dealt with now because the argument as it stood was as good as it could be at trial.
I concluded that the 5 October Letter was not admissible, and that the impugned clauses and particulars should be struck out. I made orders accordingly, and also made orders for further interlocutory steps in the proceeding. As the particulars to clause [52] sought to address more than the 5 October Letter, I granted leave to the Applicant to re‑particularise the allegation made in clause [52] without traversing my ruling in relation to the 5 October Letter and consequent striking out of [56] (xx) and [56] (xxi) of the claim.
These now are my reasons for ruling the 5 October Letter inadmissible, and striking out the particulars to [52], and sub-clauses [56] (xx) and [56] (xxi) of the Claim.
The Parties’ positions
Mr Follett, counsel for the Respondent, argued that the 5 October Letter was inadmissible pursuant to s.131(1) of the Evidence Act 1995 (Cth). Mr Kenneally, counsel for the Applicant, conceded that the 5 October Letter is a communication made between persons in a dispute or a document prepared in connection with an attempt to negotiate a settlement of a dispute, within the meaning of s.131(1) of the Evidence Act. He submitted, however, that the 5 October Letter was admissible; it was relevant to the question whether the Respondent contravened the prohibition on adverse action in s.340 of the Fair Work Act 2009 (Cth), and it fell within an exception to s.131(1) provided by one or more of sub‑paras.131(2)(i) and (j) of the Evidence Act, notwithstanding that it concerned a communication in connection with settlement negotiations of the dispute the subject of the substantive proceeding.
Both counsel agreed that to be admissible the 5 October Letter must be, or be capable of being, a threat of adverse action against the Applicant within the provisions of ss.340 to 342 of the Fair Work Act.
Mr Follett said further, whether the letter is excluded or not does not matter because in any event there is no cause of action. It then follows that the exceptions to s.131(1) provided by sub-paras.131(2)(i) and (2)(j) are not made out, and the document is not admissible.
I concluded that the 5 October Letter was not a threat of adverse action, including a likely threat of adverse action. It followed that the parts of the Claim said to be a cause of action evidenced by the 5 October Letter must be excluded.
Relevant Legislative Provisions
Section 131(1) of the Evidence Act provides as follows:
(1)Evidence is not to be adduced of:
(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
Relevantly, sub-paras.131(2)(i) and (j) provide:
(2)Subsection (1) does not apply if:
…
(i)making the communication, or preparing the document, affects a right of a person; or
(j)the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
Section 340(1) of the Fair Work Act provides:
(1)A person must not take adverse action against another person:
(a)because the other person:
(i)has a workplace right; or
(ii)has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
Section 341 of the Fair Work Act then states the meaning of “workplace right” (relevantly, a person’s right to make a complaint in relation to their employment), whilst s.342 specifies the circumstances in which a person takes adverse action against another person, which pursuant to s.341(2), includes threatening to take adverse action.
Mr Kenneally characterised the relevant workplace right as a right of the Applicant to pursue his complaints about alleged bullying by other personnel of the Respondent. He articulated the alleged adverse action as a threat against the Applicant’s ability to pursue his complaints about that workplace bullying, or a threat to damage his reputation, or a threat to dismiss him, the threat in each case being contained in or communicated by the 5 October Letter. During the course of argument, the third way of characterising the alleged threat fell away. Ultimately, Mr Kenneally submitted that the 5 October Letter was issued to threaten to harm the Applicant’s reputation because of the complaints that he had made.
Mr Kenneally submitted that the 5 October Letter is capable of amounting to a threat of adverse action because of the allegations in [43] to [47] of the Claim, and chronologically the letter comes at the end of a series of events and complaints where the Applicant exercised his workplace rights, variously defined in the Claim at [43] to [47] as the Fourth, Fifth and Sixth Resource Complaint(s) and the Sixth, Seventh, Eighth and Ninth Bullying Complaint(s) (the Complaints). Mr Kenneally submitted that the Court can draw the inference that the 5 October Letter was sent in response to the alleged events in September 2017 (namely, the Complaints), that the entirety of the events was contemporaneous with the 5 October Letter, and read in context, the content of the letter gives rise to the character of a threat.
Counsel were in agreement that the exception to inadmissibility contained in sub-para.131(2)(i) of the Evidence Act applies to an existing right: see Emmett J in Glass v Demarco [1999] FCA 482 at [10].
Counsel were also in agreement that sub-par.131(2)(i) refers to substantive rights, such as the right to enjoyment of a reputation or not to be subject to tortious statements: see Liu v Fairfax Media Publications Pty Ltd [2012] NSWSC 1352; 84 NSWLR 547. Counsel agreed, and I accept, that a workplace right within the meaning of the Fair Work Act is a right within the ambit of sub-para.131(2)(i).
In relation to the content of sub-para.131(2)(j) of the Evidence Act, counsel were at issue whether sub-para.(j) applied if the letter was itself the offence, that is the letter constitutes the act giving rise to the civil penalty provision of s.340 of the Fair Work Act, or whether, in order for the sub-paragraph to apply, the letter needs to be the furtherance of the commission of the offence. Ultimately this debate fell away, and in any event, nothing turns on that distinction in the present case, as it was common ground that to be admissible the 5 October Letter either had to be a threat, or capable of being a threat, of adverse action.
Relevant parts of the Claim
The parts of the Claim sought to be struck out (and which are claimed to be a cause of action based on the 5 October Letter) are:
[52]On 5 October 2017 the Applicant advised Mr Soares [Consultant with the Respondent] by text message that he was unwell and in hospital.
Particulars
Mr Soares responded noting that Ms Jarzabkowska [Managing Director] had sent the Applicant an important email and required him to confirm its receipt. A copy of these text messages are in the possession of the Applicant's solicitors and can be viewed by prior appointment.
The Applicant subsequently received an email enclosing two letters which stated amongst other things that very serious allegations had been raised against the Applicant and if proven, he could be summarily dismissed. The letter alleged that the Applicant conducted unauthorised surveillance of senior executives' emails. The letter further stated that if the allegation was proved correct, the Applicant would unlikely be able to find work in his field and encouraged the Applicant to resign and sign a Deed of Release. A copy of these two letters are in the possession of the Applicant's solicitors and can be viewed by prior appointment.
The Applicant denies this allegation. Throughout his employment, the Applicant has been required to access the back-end IT system for work purposes and has done so without this being raised as an issue. More recently, the Applicant accessed the back-end IT system to retrieve deleted or misplaced documents knowing that at all relevant times the Applicant's use of the IT system was being monitored by the Respondent.
The alleged breach of Part 3-1 of the Fair Work Act is then pleaded in [56] of the Claim, relevantly in subparagraphs (xx) and (xxi):
[56]The Respondent has taken adverse action against the Applicant as defined in paragraphs (b), (c) and (d) of column 2 of item 1 of the table in section 342(1) of the Fair Work Act 2009 (Cth) by:
(xx)threatening to terminate the Applicant’s employment;
(xxi)threatening to undermine/harm the Applicant’s reputation if he did not resign and sign a Deed of Release; …
Chronology of relevant events
Events pleaded in the Claim
Mr Kenneally submits that the 5 October Letter and the above paragraphs should be read in context with [43] to [51] of the Claim. It suffices to note that [43] to [47] inclusive allege instances of interactions between the Respondent’s head of consulting, Ms Chia, and the Applicant, and verbal complaints by the Applicant to Mr Soares of the Respondent, in the period 11 September 2017 to 28 September 2017, namely, the Complaints.
The Claim then alleges the following events leading to the events alleged in [52]:
(a)on about 28 September 2017, following the conversation with Mr Soares, the Applicant sought legal advice (Claim at [47]);
(b)on or about 29 September 2017, the Applicant received an email from Ms Jarzabkowska, alleging that there was a complaint made against him by Ms Chia, and that the Applicant was required to meet with Mr Soares to discuss Ms Chia’s complaint (at [48]);
(c)on about 3 October 2017, the Applicant was ill and took personal leave (at [49]);
(d)on the same day, a position at the Respondent was advertised which was similar to the Applicant’s current position at the Respondent (at [50]); and
(e)on 4 October 2017, the Applicant sent Mr Soares a text message informing him that he could not attend the meeting that day (at [51]).
Events of 4 October 2017
Although not pleaded in the Claim, the evidence before me disclosed that, on 4 October 2017, a number of other allegations came to light in relation to the Applicant’s conduct, unrelated to Ms Chia’s complaint regarding his behaviour towards her. These allegations were that:
(a)on 14 September 2017, the Applicant used his master pass, without prior authorisation or a proper reason to do so, to access the “back end” of the Respondent’s email portal; and
(b)when doing this, the Applicant searched the email correspondence to, and from, the Applicant’s managers, Ms Chia, Mr Soares and Ms Jarzabkowska, that contained the Applicant’s name.
Later that day, Ms Jarzabkowska sent an email letter under the Respondent’s letterhead, advising the Applicant of the allegation of a security breach into the Respondent’s IT communications system, which I have set out in the preceding paragraph. The 4 October 2017 emailed letter noted that the Respondent (Ms Jarzabkowska and Mr Soares) had scheduled a meeting on Wednesday 4 October 2017 to address issues relating to allegations about the Applicant’s behaviour, made by Ms Chia on 26 September 2017, and that Ms Jarzabkowska understood that the Applicant was not well enough to attend that meeting. The letter continued:
In the interim, a more serious allegation of a security breach into our IT communications system has arisen.
The letter then set out the allegations of breach I have set out above. The letter continued:
If this allegation is proven it may constitute an unacceptable breach of the confidentiality expected by both team members and clients of our firm. We note that on 7 April 2015 you were issued with a Letter of Warning in relation to your behaviour that is very similar to that contained in the allegation above. I have attached a copy of the Letter of Warning and would specifically draw your attention to conditions on which your ongoing employment was permitted.
Ms Jarzabkowska advised the Applicant that until the allegation of breach was resolved and due to its seriousness, his access to the business’ IT systems was suspended. She also indicated that Mr Soares and Ms Jarzabkowska wished to schedule a meeting with the Applicant upon his return the following week “to address all of the issues outlined above with [him] personally”, the exact date and time of which would be determined once he returned to work.
5 October 2017 Letter
I received the 5 October Letter into evidence for the limited purpose of hearing the strike out application, and to rule on the admissibility of the letter as a separate question, thereby obviating the need for the trial judge to rule on the strike out and on admissibility at a final hearing of the substantive proceeding.
The letter is stated to be “without prejudice”. Given the conclusions I have reached, it suffices to describe the contents of the letter in general terms. The letter first reminds the Applicant that “very serious allegations” have been made against the Applicant. It states that, if proven, it is highly likely that the Applicant’s employment will be summarily terminated. The letter then speculates about some potential adverse consequences that may arise upon such termination, and that the manner and basis for dismissal are capable of being disclosed. It refers to the alleged security breach, notice of which had been communicated to the Applicant the previous day (by the 4 October 2017 letter).
The letter then proposes some terms of settlement, which are irrelevant to the Applicant’s complaint. Those terms of settlement are proposed as an alternative to undertaking the meeting foreshadowed in the letter of 4 October 2017. The letter concludes by specifying a period in which the settlement offer is open, and advises that thereafter the offer will lapse and the parties will proceed as foreshadowed.
I note that the letter of 4 October 2017 was specifically concerned with the new allegation against the Applicant of security breach of the Respondent’s IT communications system, and foreshadowed a meeting to address the issues outlined in that letter among the Applicant, Mr Soares and Ms Jarzabkowska, upon the Applicant’s return to work. In context, it is reasonable to infer that the reference in the 5 October Letter to the very serious allegations made against the Applicant is a reference to the allegations of his security breach of the IT system, and the action foreshadowed as being the meeting stated in the 4 October 2017 letter to occur upon the Applicant’s return to work, and I so find.
Submissions
The Applicant says that the first 3 or 4 paragraphs of the 5 October Letter constitute a threat to harm the Applicant’s reputation because of the Complaints. Mr Kenneally submitted that the intervening event described in the letter of 4 October 2017 does not change that threat because the timing is so close together. The letter comes at the end of the series of Complaints where the Applicant exercised his workplace rights as alleged in [43] to [47] of the Claim. The letter, Mr Kenneally submitted, does not merely say what would happen if there was a disciplinary process but has no other purpose apart from threatening the Applicant, rather than being factual statements about what consequences may flow. He submitted that the paragraphs are rhetorical in tone and contain commentary on what may happen rather than a speculation as to the consequences upon the Applicant’s reputation.
Mr Follett drew my attention to the judgment of Bromberg J in the Federal Court of Australia in FairWork Ombudsman v Australian Workers’ Union [2017] FCA 528 (FWO v AWU), in which proceeding the Australian Workers’ Union (AWU) contended that a letter given by a Mr Davis in his capacity as branch secretary of the AWU, giving notice of charges laid against two members of the AWU (Dunton and Haworth) by another person, and describing the process that is to be followed in respect of those charges under the AWU rules could not constitute threatening to take action within the meaning of s.342(2)(a) of the Fair Work Act because what was done was not the communication of a warning of an intention to inflict harm, it was, instead, a mere indication of the process to be followed in relation to the charges.
At [54] and [55] of the judgment, his Honour drew together a number of principles and drew conclusions on the facts of the case before him as follows:
[54]A number of principles may be drawn from the authorities I have just outlined. First, “threatening to take action” must involve the communication of a threat directed at an ascertainable person which is received or is likely to be received by that person. That a particular outcome is threatened by existing or prospective circumstances is not a threat of the requisite kind. Second, to threaten means to communicate an intent to inflict harm or, in other words, a warning of an intention to inflict harm. Third, the essence of a threat is that it is made for the purpose of intimidating a person. Accordingly, “threatening to take action” must involve an expression of an intimidatory purpose. Fourth, it is not necessary that a subjective intent to carry out the threat be established. Fifth, the notion of a threat is not confined to an intent to inflict harm which was unlawful or unjustified. Sixth, the presence of malice or some other injurious motive is not a prerequisite. Lastly, a threat to take action may be conditional (in the sense that X will occur if Y does not).
[55]On the pleaded facts, Davis’ letter provides the basis for concluding that the FWO can establish that a communication made by Davis was directed at and received by Dunton and Haworth. However, that a communication makes reference to the prospective prejudicial consequences for a person, should various conditions be satisfied, does not of itself characterise the communication as a threat. If it were otherwise, a threat would be made whenever a person is notified of prospective harm. There is a distinction to be drawn between the provision of information and a threat. The difficulty for the FWO in demonstrating that Davis’ letter was a threat is that a communication of intent to inflict harm and an expression of an intimidatory purpose is not apparent on the facts as pleaded or demonstrated to be available. [my emphasis]
[56]That is so including because a communication of an intent to inflict harm must logically involve an objectively ascertainable basis for thinking that the person making the communication has the capacity (directly or indirectly) to inflict the harm. Absent that characteristic, the communication is stripped of its intimidatory character and will be received and understood as empty and lacking any substance. There is nothing pleaded to support the proposition that, objectively speaking, Dunton and Haworth would have understood that Davis had the capacity to inflict harm upon them by way of a fine, suspension or expulsion from the AWU. To the contrary, what is pleaded is that Davis communicated the options available, not to him, but to the Committee of Management if the charges laid against Dunton and Haworth were found to be sustained.
Mr Follett submits that, by analogy, the 5 October Letter cannot constitute a threat, and indeed, is not a threat of adverse action. Mr Kenneally seeks to distinguish the FWO v AWU decision as limited to its circumstances, specifically, that it was concerned with the circumstances of AWU’s organisational rules and the letter writer was not the person who could mete out the consequences if the charges were proved.
Consideration
I do not accept that Bromberg J’s analysis in FWO v AWU, including the principles he draws from the cases at [55], is so limited. Specifically, I consider that the passage in [55] that I have emphasised above, is more broadly applicable than the specific facts of FWO v AWU.
I have regard to what the 5 October Letter says on its face, both the particular paragraphs to which Mr Kenneally draws my attention, but also, the whole of the letter, including its concluding paragraph, to which I have referred at [28] above, to the effect that if the settlement is not accepted and the offer lapses the foreshadowed action will take place. I also consider that the 5 October Letter must be read in the context of the circumstances which preceded the issue of the letter, being the matters alleged in [43] to [47] of the Claim – both the alleged events which lead to the Complaints, and the Complaints themselves, as urged by Mr Kenneally, and also, having regard to the letter of 4 October 2017.
As I have described above, the letter of 4 October 2017, which is open correspondence, identifies what the author describes as a separate and more serious allegation (than the conduct to date): an allegation of a security breach of the Respondent’s IT System. That letter sets out a path of disciplinary action, being a meeting “to address all of the issues outlined above”. I accept that those issues will comprise the allegation of security breach by the Applicant of the Respondent’s IT System, and may also include the issues of Ms Chia’s complaints of the Applicant’s behaviour, and the Complaints.
Given what is said on the face of the 5 October Letter I reject Mr Kenneally’s submission that the 5 October Letter does not refer to the alleged security breach by the Applicant of the Respondent’s IT communications system of which express notice is given in the 4 October 2017 letter, but refers back to the Complaints, and the preceding events pleaded in [43]-[47] of the Claim. The intervening events outlined in the 4 October 2017 letter are there expressed to be of such seriousness, what is said on the face of the 5 October Letter is expressed so plainly, that the submission that the 5 October Letter is to be read without having regard to the contents of the earlier letter cannot be made good, whether I have regard only to what is said in the 5 October Letter, or having regard to the context in which the letter came into being and was communicated. It would be artificial in the extreme to gloss over, or disregard, the 4 October 2017 letter and the events it describes.
Given that the 4 October 2017 letter specifically communicated the scheduling of a meeting to address the issues notified in the letter, the reference in the penultimate paragraph of the 5 October Letter to proceeding with the action as foreshadowed must refer to holding that meeting scheduled by the previous letter and that is how I read it. I also note that the 4 October 2017 reminded the Applicant that he had previously been down a path of disciplinary action with the Respondent in 2015 (see above at [24]), which path did not result in termination. That is, in relation to disciplinary action consequent upon a previous allegation of security breach of the IT system, he had received an outcome of which he did not need to be advised again in the 5 October Letter. It was thus reasonable for the letter to inform the Applicant of possible consequences that could follow termination if the allegation was proven.
The 5 October Letter, in the paragraphs on which Mr Kenneally relies, provides information and communicates possibly prospective prejudicial consequences for the Applicant that may arise should various conditions be satisfied, namely the allegation be proved and he be terminated. The penultimate paragraph of the letter communicates, objectively, the information that the course previously proposed will be followed should the offer not be accepted. I have concluded that that course of action had been set out in the preceding letter, the letter of 4 October 2017. As Bromberg J stated in FWO v AWU, there is a distinction to be drawn between the provision of information, and a threat. I have formed the view that the 5 October Letter provides information and speculates about possible consequences. I do not find any threat, nor do I find that the letter could constitute a threat of adverse action within the terms of s.340 of the Fair Work Act, having regard to the provisions of s.341 (meaning of workplace right) and s.342 (meaning of adverse action), and the presumption available by reason of s.361 of the Fair Work Act.
I conclude that the 5 October Letter is not, and does not contain, a threat to convince the Applicant to drop his Complaints or convince him that he should cease exercising his workplace rights. Specifically, I read the 5 October Letter as issued further to the alleged conduct discovered as described in the 4 October 2017 letter, namely the alleged security breach of the Respondent’s IT system.
I am not persuaded that the 5 October Letter contains a conditional threat. It does not say “if you don’t do X, Y will happen”. In my view the letter does no more than inform the Applicant, in the course of seeking to negotiate a settlement, that the Applicant should think carefully about what consequences possibly might follow if specific allegations against him are proven, if termination follows, and what factually could be communicated in response if certain future enquiries were ever made. Accordingly, I am not convinced that the 5 October Letter is a threat of adverse action or capable of being a threat of adverse action, including a likely threat of adverse action.
It follows that I have concluded that the 5 October Letter does not fall within any of sub-para.131(2)(i) or sub‑para.131(2)(j) of the Evidence Act. An exception to the exclusion of evidence of settlement negotiations is not engaged, and the letter is inadmissible by reason of s.131(1) of the Evidence Act. The impugned clauses and particulars of the Claim are baseless and should be struck out.
Conclusion
Accordingly, I made orders on 27 February 2018.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Baird
Associate:
Date: 7 November 2018
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